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EXHIBIT 10.7
AGREEMENT
This Agreement by and between Cetalon Corporation., a Nevada
corporation ("Cetalon") and Nature's Sunshine Products, Inc., a Utah Corporation
("NSP"), is hereby entered into as of August 27, 2001.
RECITALS
WHEREAS, NSP is loaning One Million Dollars ($1,000,000) to Cetalon
pursuant to the terms of a Convertible Promissory Note issued by Cetalon dated
as of an even date herewith (the "Note"); and
WHEREAS, as a condition of entering into the above referenced loan
transaction, each of NSP and Cetalon wish to set forth their understanding with
respect to NSP's anti-dilution rights pursuant to the terms of that certain
Subscription Agreement by and between Cetalon and NSP dated May 8, 2001 (the
"Subscription Agreement"), the number of shares purchasable under that certain
Warrant issued by NSP to Cetalon dated May 8, 2001 ("NSP Warrant") and
representation of NSP on Cetalon's Board of Directors.
AGREEMENT
In consideration of the foregoing recitals and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. Waiver; Additional Cetalon Shares. NSP agrees to waive the
anti-dilution provisions of Section 7 of the Subscription Agreement, solely with
respect to (i) options ("Options") to purchase an aggregate number of 1,032,500
shares of Cetalon's Common Stock ("Cetalon Common Stock") and (ii) 256,000
shares of restricted Cetalon Common Stock ("Restricted Stock"). Each recipient
of Options and Restricted Stock and the number of Options and shares of
Restricted Stock held by each recipient are identified on Exhibit A attached
hereto. In exchange for NSP's limited waiver with respect to the granting of the
Options and Restricted Stock, Cetalon shall issue to NSP an additional 161,572
shares of Cetalon Common Stock; provided, however, that if any of the
individuals listed on Exhibit A are terminated by the Company prior to the
vesting of such individual's Options, NSP shall return to Cetalon the number of
shares of Cetalon Common Stock necessary to adjust the percentage of Cetalon
Common Stock owned by NSP, on a fully diluted basis, to 12.5395% (excluding
shares of Cetalon Common Stock received upon conversion of the Note, received
upon the exercise of the Option to Purchase Common Stock issued by Cetalon to
NSP dated May 8, 2001, or acquired after the date of this Agreement).
2. Board Representation. So long as NSP owns at least 500,000 shares of
Cetalon's capital stock (as adjusted for stock splits, stock dividends,
recapitalizations and the like), Cetalon agrees to use its best efforts to cause
two individuals designated by NSP to be elected to Cetalon's Board of Directors.
The initial members of Cetalon's Board of Directors designated by NSP shall be
Xxx Xxxxxxx and ______________. In the event that either (or both) person(s)
declines or fails to serve as NSP's designee(s), then the designee(s) shall be
such other person(s)
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as NSP shall designate with the approval of Cetalon which approval shall not be
unreasonably withheld.
3. NSP Warrant. Cetalon agrees to a reduction in the number of shares
purchasable under the NSP Warrant by elimination of the shares scheduled to vest
on the first anniversary thereof. Such reduction shall be evidenced by Cetalon's
cancellation and delivery of the original NSP Warrant on the date hereof and
NSP's issuance of an Amended and Replacement Warrant in the form attached hereto
as Exhibit B.
4. Miscellaneous. This Agreement is not intended for and shall not be
construed for the benefit of any party not a signatory hereto. This Agreement
shall be binding upon, and inure to the benefit of the parties hereto and their
respective successors and assigns. This Amendment constitutes the entire
agreements (including all representations and promises made) among the parties
with respect to the subject matter hereof and no modification or waiver shall be
effective unless in writing and signed in writing by the party to be charged.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day above first written.
CETALON CORPORATION, a Nevada Corporation
_________________________________________
By:
Title:
NATURE'S SUNSHINE PRODUCTS, INC.,
a Utah Corporation
_________________________________________
By:
Its:
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EXHIBIT A
OPTIONS
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EXHIBIT B
NSP WARRANT
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